Co-op finally sets out online stall

The Coop has announced plans to trial an online shop despite fears that it
will erode the grocer’s bricks-and-mortar market share. “If you are not
prepared to eat your own children, someone else might,” said food boss Steve
Murrells.

The Co-op has announced plans to launch an online grocery store; it is the last of the 'big six' supermarkets to go digital.Photo: PA

The Co-op is the last of the ‘big six’ supermarkets to make the move online. Last month, Morrisons sealed a deal with Ocado to sell its wares through the online grocer from April next year, and Iceland, which pulled its digital operations eight years ago, has just reopened its e-commerce site.

The Co-op has been slow on the digital uptake. Average basket size at the supermarket stands at £6, and the mutual’s head of retail Steve Murrells has previously said this made it hard to justify the massive outlay on an online operation.

However, Murrells has now changed his tune. He told Retail Week: “Evidence shows [online shopping] replaces bricks-and-mortar sales and is margin eroding [but] we need to get match fit if we are going to start to compete again. For the last few years we had lost our mojo and we needed clear leadership and direction.”

Murrells hopes that the online shop will help grow profits at the grocer after its 9.5pc dip in underlying earnings in 2012 following a “challenging year”. “There are two channels growing in grocery - convenience and digital,” he said. “Technology is coming to the Co-op and it couldn’t come quickly enough.”

The mutual will launch the first of four trials before Christmas, road-testing a variety of delivery methods in order to pinpoint the most profitable way to run the online operation. “The trials allow us to understand how we can create an online food offer that is incremental and is not as profit eroding,” said Murrells.

“We have a 6.6% market share so there is dramatic room for us to grow,” he added.